The Securities and Exchange Commission (SEC) announced settled charges against FamilyWealth Advisers, LLC, a Florida-based registered investment adviser, and FamilyWealth Asset Management, LLC, a Texas-based registered investment adviser, for violations in connection with their use of liability disclaimers and assignment clauses in their retail investor advisory agreements and their violations of the custody rule.

The SEC’s order finds that, from at least May 2019 through December 2024, FamilyWealth Advisers, LLC and FamilyWealth Asset Management, LLC (collectively, Respondents) required retail advisory clients to sign investment advisory agreements that included liability disclaimer language, commonly referred to as a hedge clause, that contained misleading statements regarding the scope of each advisers’ unwaivable fiduciary duty and could lead a client to believe, incorrectly, that the client had waived a non-waivable cause of action against the adviser provided by state or federal law.

The order also finds that the advisory agreements failed to provide, in substance, that no assignment of the advisory agreement may be made by the investment advisers without the consent of the advisory clients.

Additionally, the order finds that the advisory agreements provided the Respondents with custody of client assets, yet the firms failed to obtain verification by an independent public accountant of client funds and securities.

Finally, according to the order, despite having written policies and procedures concerning liability disclaimers and assignment, the Respondents failed to implement those policies and procedures.

The SEC’s order finds that the Respondents willfully violated Sections 206(2), 205(a)(2), and Section 206(4) of the Advisers Act and Rules 206(4)-2 and 206(4)-7 thereunder. Without admitting or denying the findings, Respondents consented to a cease-and-desist order.

FamilyWealth Advisers, LLC agreed to pay a civil penalty of $85,000, and FamilyWealth Asset Management, LLC agreed to pay a civil penalty of $65,000.